TIDMOXF
RNS
Oxford Technology 4 VCT Plc
Unaudited Half-Yearly Report
For the period 1 March 2020 to 31 August 2020
6 Months Ended Year Ended
31 August 2020 29 February 2020
-------------------------------- --------------- -----------------
Net Assets At Period End GBP3.32m GBP4.15m
-------------------------------- --------------- -----------------
Net Asset Value (NAV) Per Share 28.8p 36.1p
-------------------------------- --------------- -----------------
Dividend Paid in Period 5.0p 3.0p
-------------------------------- --------------- -----------------
Cumulative Dividend Per Share 48.0p 43.0p
-------------------------------- --------------- -----------------
Total NAV Return Per Share 76.8p 79.1p
-------------------------------- --------------- -----------------
Share Price At Period End
(Mid-Market) 18.0p 26.5p
-------------------------------- --------------- -----------------
Earnings Per Share (2.3)p (9.9)p
-------------------------------- --------------- -----------------
Statement on behalf of the Board
I am pleased to present the unaudited results for the six month period
ended 31 August 2020. The period under review continues to be dominated
by the Covid-19 pandemic. Your Investment Adviser and the Directors
have continued to manage the VCT and its portfolio effectively via
remote working during lockdown.
The six months to 31 August 2020 have been a volatile and uncertain
period for the economy and for businesses operating within this
environment. During this period, your Board has kept the impact of the
pandemic on your Company's investments closely under review.
On 19 May 2020, when we issued our annual report, we reviewed the
portfolio valuation since the year ended 29 February 2020 and announced
a reduction in the NAV per share from 36.1p to an unaudited 34.3p. Since
then, the pandemic along with the lockdown has continued to impose great
uncertainty for UK companies. However our overall portfolio has remained
relatively stable as the technology sector has been less severely
impacted than others. During the six month period the company's holding
in Castleton Technology Plc ("Castleton") was realised, with an interim
dividend of 5.0p per share paid on 31 July.
Results and Dividend
The Company's net asset value (NAV) per ordinary share has decreased by
7.3p per share from 36.1p at 29 February 2020 to 28.8p per share as at
31 August 2020. Operating costs reduced the NAV per share by 0.45p
during the period, the dividend reduced the NAV per share by 5.0p, with
the remaining 1.95p reduction being due to movements in the portfolio,
the most significant of which relate to Select Technology and ImmBio.
As noted above, the current NAV of 28.8p per ordinary share is a
reduction of 0.5p net of dividend since the mid-May update of 34.3p per
share.
Portfolio Review
The portfolio now containing 12 active investments continues to develop.
No companies have sought funding from the VCT during this period. The
disposal of Castleton has led to significant portfolio concentration
with two investments representing over 70% of the current portfolio
valuation.
Arecor now represents 45% of the portfolio valuation. It has published
excellent phase 1 clinical data for its ultra-rapid insulin. The trial
was sized to demonstrate equivalence, and on average the Arecor insulin
delivered twice the early glucose lowering effect of the next fastest
insulin on the market. Arecor will be continuing its clinical insulin
programme and is expected to raise further funds soon to progress this.
Select Technology represents nearly 25% of the value of the portfolio.
Select distributes high quality document management software via its
global channel partners while adding value through its development team
by providing integrations and bespoke solutions. Sales have been
significantly affected by Covid-19 with sales from February to July,
being about 50% of the previous six months. However, the greatest impact
was in April and May and sales have revived in the most recent months
and the hope is that the revival continues.
ImmBio - formally known as ImmunoBiology Ltd has licensed its
pneumococcal vaccine to China National Biotech Group. It has completed
parts of its technology transfer and is now seeking to start a phase 2
study of the same vaccine. To do this it has been applying for grants.
It was rejected for several grants but has two more applications
pending. Coronavirus has again highlighted the importance of vaccines to
the world and in recent years pneumococcal disease has claimed a similar
number of deaths as Covid-19 in 2020. An existing vaccine has reduced
the death rate, but existing vaccines only protect against fewer than 20
of the 90 or so existing strains. As ImmBio's ImmBioVax technology
utilises heat shock proteins to activate T-cell responses, it is hoped
that it can be used to create vaccines for a wide range of currently
poorly served infectious diseases.
Other investments in the portfolio which individually currently
represent a small proportion of NAV include:
Oxis continues with the development of its battery manufacturing
capabilities, signing a lease on a manufacturing plant in Brazil which
is scheduled to come online in 2023. The factory will require an
investment of $50m and be capable of producing 5 million Lithium Sulphur
cells a year. Whilst our holding has been significantly diluted, Oxis
still offers upside potential, although it may still be several years
before it is realised.
Insense is developing a treatment for fungal nail disease. Work is
continuing with formulation and stability testing in preparation for a
clinical trial in late 2022 or possibly in 2023. Ultimate realisation
is therefore likely to be protracted.
Novacta's drug targeting Gram-negative bacterial infections continues
through clinical trials in the hands of Spero Therapeutics. Preliminary
Phase 1 clinical data has encouraged Spero to plan further trials in
2021. Ultimate realisation is therefore likely to be protracted.
Diamond Hard Surfaces produces a diamond like coating which, whilst
being extremely hard, is also an electrical insulator but a good
conductor of heat. The number of customers is growing steadily, but
revenue per customer remains small. Total sales have improved in 2020
with sales in the six months to June being similar to the whole of 2019.
The major reason for this has a been a growth in a heat sink
application. If DHS does find a lucrative niche, then its value could
grow rapidly.
Whilst Mirriad is currently a minor proportion of NAV, it has seen
revenue double for the 6 months to the end of June compared to the
previous year. There has been growth of sales of their inserted
advertising in China and the United States from existing and new
customers. This comes against a backdrop of falling demand for
advertising.
These companies fall into two camps. In some, our holding is so small,
that even if the company is ultimately highly successful, the return to
our Company would be small. Others remain relatively early stage, so
their ultimate valuation remains unclear. Directors, in consultation
with the Investment Adviser continue to focus on determining if
achieving an early exit from some of these companies would be in the
interest of shareholders.
Overall, as seen in the Income Statement, the net impact of valuation
changes across the portfolio during the first half of the 2020/2021 year
was a loss of GBP209k.
The Directors, along with the Investment Adviser, continue to take an
active interest in the companies within the portfolio, supporting
management teams to achieve company development, but also to prepare
companies for realisation at the appropriate time. It should however be
noted that approaches do occur at other times, and the ability of the
Directors and Investment Adviser to be able to provide support when such
approaches occur is essential for maximising value.
VCT qualifying status
The decreasing size of the VCT means significant focus is required to
ensure we retain sufficient working capital to manage the Company whilst
meeting all the conditions laid down by HMRC for maintaining approval as
a VCT. The Board has procedures in place to ensure that the Company
continues to comply with these conditions, in particular the new 80%
qualifying holding limit which has been in place since 1 March 2020.
Presentation of half-yearly report
In order to reduce the length of this report, we have omitted details of
the Company's objectives and investment strategy, its Advisers and
Registrar and how to buy and sell shares in the Company. These details
are all included in the Annual Reports, which together with previous
half-yearly reports, are available for viewing on the Oxford Technology
website.
Outlook
Nothing has changed in our plans for your Company. We continue to
believe your VCT is an appropriate structure to hold your Company's
investments, but it would be preferable to have a larger asset base to
share the operating costs. I have reported previously of our efforts to
seek prospective parties who are potentially interested in entering the
VCT industry. This initiative is currently on hold whilst any such
possible organisations are entirely focussed on more immediate actions
within their own businesses as a result of the Covid-19 pandemic. We
have always made clear that there is no certainty such a route can be
achieved, but the Directors will continue seeking such opportunities
when the future outlook has become clearer. Directors are also
revisiting the economics of a merger with some or all of the other
Oxford Technology VCTs. Such a transaction is not without risk and it is
by no means clear that it would be in your Company's best interests to
participate. We will update shareholders if and when these discussions
reach a conclusion, and in any event, shareholder approval will be
required before any transaction could proceed.
Apart from the change to investment qualifying levels, there have been
no recent changes to VCT legislation, or their potential impact on both
the VCT and its investee companies. It is still too early to fully
assess the impact of Covid-19, and the resulting government
interventions. Whilst the impact of Brexit remains unclear, your
Directors do not expect its eventual outcome to have a material impact
on portfolio valuations.
Your Board and Investment Adviser continue to work so as to best
position your VCT such that, when valuations and liquidity allow,
holdings can be exited and proceeds distributed to shareholders, whilst
keeping a keen eye on maintaining costs as low as possible in the
interim.
Finally, I would like to take this opportunity to thank shareholders for
their continued support. We were delighted a significant number of you
managed to attend our zoom AGM, and we will consider the merits of
future online forums which allow a greater number of shareholders to
participate. We hope that the difficulties this year have not been too
disruptive to our shareholders and look forward to a return to an "old
normal".
David Livesley
Chairman
8 October 2020
Investment Portfolio as at 31 August 2020
Change in
Carrying value for
Net Cost value at the % Equity
of investment 31/08/20 6 month % Equity held All % Net
Company Description GBP'000 GBP'000 period GBP'000 held OT4 OTVCTs Assets
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Arecor Protein stabilisation 590 1,289 - 5.6 10.5 38.9
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Select -- STL Specialist photocopier
Management Ltd interfaces 237 708 (314) 18.4 58.6 21.4
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
ImmBio Novel vaccines 857 331 (224) 13.0 22.6 10.0
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Diamond Hard
Surfaces Diamond coatings 640 198 63 49.9 49.9 6.0
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Oxis Energy Battery technology 305 85 43 0.2 0.3 2.6
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Active wound
Insense healing dressings 476 67 - 2.5 6.8 2.0
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Solid state directional
Plasma Antennas antennas 700 60 20 30.9 48.8 1.8
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Novacta Antibiotics Development 347 59 - 2.3 2.3 1.7
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Dynamic Extractions Separation technology 377 44 (12) 30.4 30.4 1.3
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
MirriAd Advertising Virtual product
(bid price 13.0p) placement - 9 5 0.0 0.0 0.3
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Production of
Metal Nanopowders metal nanopowders 52 - - 16.7 36.7 -
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Superhard Materials Very hard materials 9 - - 18.2 40.0 -
-------------------- ------------------------ -------------- --------- --------------- --------- --------- ------
Total Investments 4,589 2,850 (419) 86.0
---------------------------------------------- -------------- --------- --------------- --------- --------- ------
Other Net Assets 466 14.0
---------------------------------------------- -------------- --------- --------------- --------- --------- ------
Net Assets 3,316 100.0
---------------------------------------------- -------------- --------- --------------- --------- --------- ------
Responsibility Statement of the Directors in respect of the half-yearly
report
We confirm that to the best of our knowledge:
-- the half-yearly financial statements have been prepared in accordance
with the statement "Interim Financial Reporting" issued by the Financial
Reporting Council;
-- the half-yearly report includes a fair review of the information required
by the Financial Services Authority Disclosure and Transparency Rules,
being:
-- an indication of the important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements.
-- a description of the principal risks and uncertainties for the remaining
six months of the year.
-- a description of related party transactions that have taken place in the
first six months of the current financial year that may have materially
affected the financial position or performance of the Company during that
period and any changes in the related party transactions described in the
last annual report that could do so.
-- The assets of the Company include a cash balance of GBP466,000. After
reviewing the forecast for the Company, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Company therefore
continues to adopt the going concern basis in preparing the half year
accounts
On behalf of the Board:
David Livesley
Chairman
8 October 2020
Income Statement
Six months to 31 Aug 2020 Six months to 31 Aug 2019 Year to 29 February 2020
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Gain/(Loss)
on disposal
of fixed
asset
investments - 210 210 - 29 29 - (198) (198)
Unrealised
loss on
valuation
of fixed
asset
investments - (419) (419) - (266) (266) - (852) (852)
Investment
income - - - - - - 19 - 19
Investment
management
fees (21) - (21) (7) (21) (28) (56) - (56)
Other
expenses (31) - (31) (26) - (26) (54) - (54)
Return on
ordinary
activities
before tax (52) (209) (261) (33) (258) (291) (91) (1,050) (1,141)
Taxation on
ordinary
activities - - - - - - - - -
------------ ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Return on
ordinary
activities
after tax (52) (209) (261) (33) (258) (291) (91) (1,050) (1,141)
------------ ------------- ------------- ------------- ------------- -------------
Earnings per
share --
basic and
diluted (0.5)p (1.8)p (2.3)p (0.3)p (2.3)p (2.6)p (0.8)p (9.1)p (9.9)p
------------ ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
There was no other Comprehensive Income recognised during the year.
The 'Total' column of the Income Statement is the Profit and Loss
Account of the Company, the supplementary Revenue and Capital return
columns have been prepared under guidance published by the Association
of Investment Companies.
All Revenue and Capital items in the above statement derive from
continuing operations.
The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
Balance Sheet
As at 31 Aug As at 31 Aug As at 29 Feb
2020 2019 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------- ------- --------
Fixed asset investments at
fair value 2,850 4,675 3,891
Debtors 13 18 10
Cash at Bank 466 315 262
Creditors: Amounts falling
due within one year (13) (6) (10)
Net current assets 466 327 262
Net assets 3,316 5,002 4,153
--------------------------- ------- ------- ------- ------- ------- --------
Called up share capital 1,152 1,152 1,152
Share premium reserve 813 813 813
Unrealised capital reserve (1,739) (266) (770)
Profit and Loss account 3,090 3,303 2,958
--------------------------- ------- ------- --------
Total equity shareholders'
funds 3,316 5,002 4,153
Net asset value per share 28.8p 43.4p 36.1p
--------------------------- ------- ------- ------- ------- ------- --------
Statement of Changes in Equity
Unrealised Profit &
Share Premium Capital Loss
Share Capital Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- ---------- -------- --------
As at 1 March 2019 1,152 813 7 3,667 5,639
Revenue return on ordinary activities
after tax - - - (54) (54)
Current period gains on disposal - - - 29 29
Current period losses on fair value
of investments - - (266) - (266)
Prior years' unrealised gains now
realised - - (7) 7 -
Dividends paid - - - (346) (346)
Balance as at 31 August 2019 1,152 813 (266) 3,303 5,002
-------------------------------------- ------------- ------------- ---------- -------- --------
As at 1 March 2019 1,152 813 7 3,667 5,639
Revenue return on ordinary activities
after tax - - - (91) (91)
Current period losses on disposal - - - (198) (198)
Current period losses on fair value
of investments - - (852) - (852)
Prior years' unrealised losses
now realised - - 75 (75) -
Dividends paid - - - (345) (345)
-------------------------------------- --------
Balance as at 29 February 2020 1,152 813 (770) 2,958 4,153
-------------------------------------- --------
As at 1 March 2020 1,152 813 (770) 2,958 4,153
Revenue return on ordinary activities
after tax - - - (52) (52)
Current period gains on disposal - - - 210 210
Current period losses on fair value
of investments - - (419) - (419)
Prior years' unrealised gains now
realised - - (550) 550 -
Dividends paid - - - (576) (576)
Balance as at 31 August 2020 1,152 813 (1,739) 3,090 3,316
-------------------------------------- ------------- ------------- ---------- -------- --------
Statement of Cash Flows
Six months to 31 Six months to 31 Year to 29 Feb
Aug 2020 Aug 2019 2020
GBP'000 GBP'000 GBP'000
-------------------------- ---------------- ---------------- --------------
Cash flows from
operating
activities
Return on ordinary
activities before
tax (261) (291) (1,141)
Adjustments for:
(Gain)/loss on
disposal of fixed
asset investments (210) (29) 198
Loss on valuation of
fixed asset
investments 419 266 852
Increase/(decrease)
in creditors 3 (7) (3)
Increase in debtors (3) (16) (7)
Outflow from
operating
activities (52) (77) (101)
-------------------------- ---------------- ---------------- --------------
Cash flows from investing
activities
Purchase of fixed asset
investments - (38) (67)
Sale of fixed asset
investments 832 492 491
-------------------------- ---------------- ---------------- --------------
Inflow from investing
activities 832 454 424
-------------------------- ---------------- ---------------- --------------
Cash flows from financing
activities
Dividends paid (576) (346) (345)
-------------------------- ---------------- ---------------- --------------
Outflow from financing
activities (576) (346) (345)
-------------------------- ---------------- ---------------- --------------
Increase/(decrease) in
cash and cash
equivalents 204 31 (22)
-------------------------- ---------------- ---------------- --------------
Opening cash and cash
equivalents 262 284 284
-------------------------- ---------------- ---------------- --------------
Closing cash and cash
equivalents 466 315 262
-------------------------- ---------------- ---------------- --------------
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31
August 2020 have been prepared in accordance with the Financial
Reporting Council's (FRC) Financial Reporting Standard 104 Interim
Financial Reporting ('FRS 104') and the Statement of Recommended
Practice (SORP) for Investment Companies re-issued by the Association of
Investment Companies in November 2014. Details of the accounting
policies and valuation methodologies are included in the Annual Report.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 August
2020 do not constitute statutory accounts within the meaning of Section
415 of the Companies Act 2006. The comparative figures for the year
ended 29 February 2020 have been extracted from the audited financial
statements for that year, which have been delivered to the Registrar of
Companies. The independent auditor's report on those financial
statements, in accordance with chapter 3, part 16 of the Companies Act
2006, was unqualified. This half-yearly report has not been reviewed by
the Company's auditor.
3. Earnings per share
The calculation of earnings per share for the period is based on the
return attributable to shareholders divided by the weighted average
number of shares in issue during the period. There are no potentially
dilutive capital instruments in issue and, therefore, no diluted returns
per share figures are relevant.
4. Net asset value per share
The net asset value per share is based on the net assets at the period
end divided by the number of shares in issue at that date (11,516,946 in
each case).
5. Principal risks and uncertainties
The Company's assets consist of equity and fixed interest investments,
cash and liquid resources. Its principal risks are therefore market risk,
credit risk and liquidity risk. Other risks faced by the Company include
economic, loss of approval as a Venture Capital Trust, investment and
strategic, regulatory, reputational, operational and financial risks.
These risks, and the way in which they are managed, are described in
more detail in the Company's Annual Report and Accounts for the year
ended 29 February 2020. The Company's principal risks and uncertainties
have not changed materially since the date of that report.
6. Related party transactions
OT4 Managers Ltd, a wholly owned subsidiary, provides investment
management services to the Company for a fee of 1% of net assets per
annum.
7. Copies of this statement are available from Oxford Technology
Management, Magdalen Centre, Oxford Science Park, Oxford OX4 4GA and on
the Company's website.
Board Directors: David Livesley, Alex Starling, Robin Goodfellow and
Richard Roth.
Investment Manager: OT4 Managers Ltd with services contracted to Oxford
Technology Management Ltd
Website: www.oxfordtechnologyvct.com/vct4.html
The information above is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU No.
596/2014). Upon the publication of this announcement via a Regulatory
Information Service this inside information is now considered to be in
the public domain.
Enquiries -- Lucius Cary
Oxford Technology Management
01865 784466
(END) Dow Jones Newswires
October 09, 2020 02:00 ET (06:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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